In his Law and Accounting Column in the Chicago Daily Law Bulletin, Jack Barber discussed a recent Illinois Appellate Court case involving two Illinois laws relating to the gaming industry. In Tomm’s Redemption Inc. v. Hamer, 2014 IL App (1st) 131005 (March 14, 2014), the Appellate Court discussed two statutes that impact the gaming industry. The Coin-Operated Amusement Device and Redemption Machine Tax Act, 35 ILCS 510/1, applies to coin-operated games that are not used for gambling. The Video Gaming Act, 230 ILCS 40/35, applies to video game devices used for gambling.
In the case, the Appellate Court upheld the validity of Section 35(a) of the Video Gaming Act, which prohibits and criminalizes video-gaming devices that contain knock-off switches and retention meters. Knock-off switches and retention meters, which have been prohibited by federal law since at least 1951, serve as a type of illicit accounting system that transforms amusement devices that do not have a direct-payout system, such as a slot machine, into gambling devices. The Appellate Court also held that tax decals issued pursuant to the Coin-Operated Amusement Device and Redemption Machine Tax Act do not constitute a license to operate a coin-operated video gaming machine. Rather than licenses, these decals are only proof that tax was paid on the coin-operated device.